SBA Loans and Bankruptcy

For business owners with SBA loans, there is a assumption (incorrectly) that SBA loans can not be discharged.

§523 of the Bankruptcy Code is the primary section in the Code which outlines what is and isn’t dischargable. In it, SBA loans are not given any exemption from the discharge. So a wholly unsecured SBA loan is dischargable like any other unsecured, non-priority debt. You do need to make sure that the SBA loan was not secured by other assets like your home. This is more common with the larger SBA loan.

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